Burning issue: Still a long way to go to dethrone old king coal

Business

Burning issue: Still a long way to go to dethrone old king coal

For as long as the world needs steel, the economics of metallurgical or coking coal will remain very attractive

Allan Seccombe

Most people in the energy business would recognise that coal’s days are numbered. As concerns over climate change escalate, major mining companies are reducing their exposure to coal. That includes the likes of BHP (https://www.sharenet.co.za/v3/quickshare.php?scode=BHP), Rio Tinto, Anglo American (https://www.sharenet.co.za/v3/quickshare.php?scode=AGL), and South32 (https://www.sharenet.co.za/v3/quickshare.php?scode=S32). Even Glencore (https://www.sharenet.co.za/v3/quickshare.php?scode=GLN), once a champion for coal, has promised to cap its production in response to investor pressure.

But not all coal is created equal. Much of the divestment is from thermal coal as opposed to metallurgical coal. Thermal coal, also known as energy coal or steaming coal, is of a lower grade and is typically used to fire power stations. Metallurgical coal, or coking coal, is of a higher quality and essential in the steel-making process.

It’s often argued that thermal coal will be in demand for many years to come. According to the Global Energy Monitor, there are currently 458 coal-fired units under construction around the world, and a further 257 units have been announced. (Having said that, another 2,117 units have been cancelled and will never see the light of day.)..

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